Canada: Proposed Regulations And Distribution Of Recreational Cannabis In Canadian Provinces And Territories

On April 13, 2017, the Federal Government introduced Bill C-45,
An Act respecting cannabis and to amend the Controlled Drugs
and Substances Act, the Criminal Code and other Acts (the
"Act"). Once passed, the Act will
establish a national framework for the governance and strict
regulation of recreational cannabis in Canada. Under the proposed
Act, the Federal Government will be responsible for overseeing the
regulatory framework governing the licensed cultivation, production
and manufacturing of cannabis and setting industry-wide standards
with respect thereto, whereas the provinces and territories will be
responsible for regulating the distribution and sale of
recreational cannabis within their own jurisdictions.

The Act currently provides a general regulatory framework for
recreational cannabis, however, provincial, territorial and
municipal governments will be permitted to deviate from certain
proposed federal standards, including the following limits and
restrictions proposed in the Act:

The minimum age to purchase, possess
and use cannabis will be eighteen (18) years of age (however,
provinces and territories can raise such age limit);

The Act will prohibit individuals
aged eighteen (18) years or older from possessing more than thirty
(30) grams of dried cannabis (or its equivalent) in public
(however, provinces and territories can lower such limit or provide
more restrictive limits on possession);

Adults will be permitted to grow up
to four (4) cannabis plants in their home for personal use
(however, the provinces and territories can lower such limit or
prohibit personal cultivation); and

Minimum health and safety standards
will be required in provincial and territorial legislation
regulating cannabis (however, the provinces and territories are
able to decide where and how cannabis will ultimately be retailed
and distributed within their jurisdiction, in addition to setting
restrictions on where recreational cannabis can be consumed).

Given the latitude afforded to the provinces and territories
that permits them to tailor or deviate from certain federal
standards contemplated in the Act, as well as their ability to
control the distribution and retail of recreational cannabis in
their respective jurisdictions, the following is a summary of the
proposed regulatory approaches that have been announced by each
province and territory. A chart summarizing the proposed
regulations in each jurisdiction can be found here.

Alberta

Distribution &
Retail: Alberta has proposed a hybrid model consisting of
private retailers and government-run online sales of recreational
cannabis. The Alberta Gaming and Liquor Commission
("AGLC") will be the sole wholesaler of recreational
cannabis and will be responsible for overseeing the distribution
and sale of recreational cannabis in the Province. Private
retailers will have to be licensed by the AGLC and will be
prohibited from selling recreational cannabis alongside alcohol,
tobacco or pharmaceuticals. Alberta recently announced that it
expects to issue up to 250 licenses to private
retailers.

Consumption
Restrictions: Consumers will be permitted to consume
recreational cannabis in their private residences and in public
spaces where tobacco is permitted. Consumption will be banned in
motor vehicles and places frequently occupied by children,
including, schools, daycares and hospitals. Municipal governments
will be permitted to set additional restrictions.

Minimum Age:
Eighteen (18) years old.

Personal
Cultivation: Four (4) plants per private residence.

British Columbia

Distribution &
Retail: British Columbia intends on implementing a hybrid
distribution and retail structure, whereby both private and public
retailers will sell recreational cannabis. The BC Liquor
Distribution Branch ("LDB") will be the sole wholesaler
of recreational cannabis in the province and will also operate
public retail stores. Private retailers will be licenced and
monitored by the Liquor Control and Licencing Branch
("LCLB"). In urban areas, licenced retailers will be
prohibited from selling cannabis alongside alcohol. At this time,
it is uncertain whether online sales in the province will be
operated by private or public retailers, or both.

Consumption
Restrictions: Consumption of recreational cannabis will be
limited to those public spaces where smoking tobacco is permitted
and prohibited in public areas frequented by children. Cannabis
consumption in motor vehicles will be prohibited. Municipal
governments will be permitted to set additional restrictions.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: Four (4) plants per private residence,
provided the plants are not visible from public spaces around the
property. Personal cultivation will be prohibited in residences
used as daycare facilities.

Manitoba

Distribution &
Retail: Manitoba intends on implementing a distribution
and retail model that would provide for government regulation and
management of the supply chain and private retail of recreational
cannabis. Manitoba's Liquor and Gaming Authority
("LGA") (to be renamed the Liquor, Gaming and Cannabis
Authority) will be responsible for regulating the purchase,
storage, distribution and retail of recreational cannabis and will
oversee the licensing regime for private retail stores. The
Manitoba Liquor and Lotteries Corporation ("MBLL"), as
provincial wholesaler, will administer and oversee the supply and
distribution of recreational cannabis in the Province, whereas the
private sector will operate all retail locations and will be
required to purchase cannabis from the MBLL. Manitoba has signaled
its intention to allow licensed retailers to offer online sales.
Retailers will not be permitted to sell cannabis alongside alcohol.
Municipalities will be permitted to prohibit the sale of
recreational cannabis upon holding a plebiscite.

Retail Agreements:
Manitoba recently announced that it has conditionally accepted
proposals from the following four (4) entities to operate retail
sales in the Province: a joint venture between Canopy Growth Corp.
and Delta 9 Cannabis Inc., National Access Cannabis Corp., Tokyo
Smoke (a subsidiary of Hiku Brands Company Ltd.) and 10552763
Canada Corp. (a newly formed consortium featuring Avana Canada
Inc., Fisher River Cree Nation in Manitoba, Chippewas of the Thames
First Nation in Ontario, MediPharm Labs of Ontario, and U.S-based.
cannabis dispensary brand Native Roots Dispensary).

Consumption
Restrictions: TBD

Minimum Age:
Nineteen (19) years old (the only province to deviate from its
legal drinking age).

Personal
Cultivation: Prohibited.

New Brunswick

Distribution &
Retail: The distribution and sale of recreational cannabis
in New Brunswick will be the sole responsibility of the
public sector. The newly formed Cannabis Management Corporation, a
Crown corporation, will oversee, control and manage retail sales of
recreational cannabis in New Brunswick. The New Brunswick Liquor
Corporation ("NB Liquor"), through its subsidiary,
Cannabis NB, will operate stand-alone retail stores that will be
governed by the rules and regulations established by the Cannabis
Management Corporation. The New Brunswick government anticipates
that there will be approximately twenty (20) retail locations in
fifteen (15) communities throughout the Province. Additional
locations will be established at a later date based upon market
conditions. Online sales will be available
province-wide.

Supply Contracts:
New Brunswick has partnered with three (3) cannabis producers to
supply the province with cannabis for the recreational market:
Zenabis, OrganiGram and Canopy Growth Corp.

Consumption
Restrictions: Consumption of recreational cannabis will be
prohibited in public spaces. Additionally, cannabis stored in
private residences will have to be in a locked container or a
locked room to ensure it is not accessible to minors.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: Permitted, however the number of permitted
plants has not been released.

Newfoundland and Labrador

Distribution &
Retail: Newfoundland and Labrador has proposed a model
whereby the Newfoundland and Labrador Liquor Corporation
("NLC") will oversee the distribution of cannabis in the
province and control the possession, sale and delivery of
recreational cannabis, and private retailers, licenced and
regulated by the NLC, will be responsible for retail sales of
recreational cannabis. Online sales of recreational cannabis will
initially only be available through the NLC.

Supply Contract: The
Province has entered into a supply and production agreement with
Canopy Growth Corp.

Consumption
Restrictions: Consumption of recreational cannabis will be
limited to private residences only.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: TBD

Northwest Territories

Distribution &
Retail: The Northwest Territories Liquor Commission will
be responsible for the import and sale of recreational cannabis.
Initially, recreational cannabis will be sold by the Liquor
Commission through its retail stores and via secure online
ordering. Unlike other provinces (except Nova Scotia), recreational
cannabis will be sold alongside liquor. In the future, the
Territory will consider implementing a retail model permitting
stand-alone cannabis stores.

Consumption
Restrictions: Consumption of recreational cannabis will be
permitted in private dwellings and select public spaces, but will
be prohibited in areas frequented by children, large crowds, and
areas where smoking tobacco is prohibited. Areas such as parks,
trails and streets, when not being used for public events, will be
permitted areas for the use of cannabis (unless municipalities
within such areas restrict the use of cannabis in such areas).
Cannabis in vehicles must be unopened. If opened, it must be
resealed and stored in an area of the vehicle that does not permit
access by the occupants in the vehicle. Municipalities will have
the option of holding a plebiscite to establish restrictions and
prohibitions on recreational cannabis.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: Four (4) plants per private residence.

Nova Scotia

Distribution &
Retail: Nova Scotia has proposed a public distribution and
retail model whereby the Nova Scotia Liquor Corporation
("NSLC") will oversee the distribution and sale of
recreational cannabis through its existing retail operations and
through secure online sales and home delivery. Although
recreational cannabis will be sold alongside alcohol, the area in
which the cannabis will be sold will be separate and not visible
from the rest of the store. NSLC will initially sell recreational
cannabis through nine (9) existing retail locations. The Province
intends on reassessing the retail landscape following the first
year.

Consumption
Restrictions: TBD

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: Four (4) plants per private residence.

Nunavut

Distribution &
Retail: The Nunavut Liquor Commission ("NULC")
will oversee the distribution and sale of recreational cannabis.
Initially, there will be no physical retail stores in 2018. Sales
of recreational cannabis will be conducted online and by phone. The
Territory will consider implementing a system in which the NULC
oversees and controls the sale and distribution of recreational
cannabis, but outsources all retail sales to the private
sector.

Consumption
Restrictions: Consumption of recreational cannabis will be
permitted within private residences and in public spaces where the
consumption of tobacco is permitted, but prohibited in areas
frequented by children such as schools and playgrounds, as well as
health care centres. Cannabis in vehicles will have to be in closed
packaging and not accessible to the vehicle occupants.
Municipalities will be able to place restrictions the use of
cannabis in public spaces.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: TBD

Ontario

Distribution &
Retail: Ontario has proposed a government-run distribution
and retail model. The Ontario Cannabis Retail Corporation
("OCRC"), a subsidiary of the Liquor Control Board of
Ontario ("LCBO"), will be the sole provincial retailer of
recreational cannabis in Ontario, operating through stand-alone
stores and via online sales. The Province has announced that
approximately forty (40) stand-alone stores will be open by July
2018, eighty (80) stand-alone stores by July 2019 and one hundred
and fifty (150) stand-alone stores by 2020. Online sales of
recreational cannabis (via Shopify Inc.'s e-commerce platform)
will be available in all regions of the Province.

Consumption
Restrictions: Consumption of recreational cannabis will be
restricted to private residences only. No person will be permitted
to consume recreational cannabis in public places or vehicles.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: Four (4) plants per private residence.

Prince Edward Island

Distribution &
Retail: The Liquor Control Corporation will operate four
(4) stand-alone cannabis retail stores located in Charlottetown,
Summerside, Montague and West Prince, as well as an e-commerce
platform with secure home delivery.

Consumption
Restrictions: Consumption of recreational cannabis in the
Province will initially be limited to private residences with the
potential to be expanded into designated public spaces. Cannabis
being transported in vehicles must remain in unopened packaging.
Open packages of cannabis being transported in vehicles will have
to be securely stored and inaccessible to those in the
vehicle.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: TDB

Quebec

Distribution &
Retail: The Société québécoise
du cannabis ("SQC"), which will be a newly created
government agency and a subsidiary of the Société des
alcools du Québec, will act as the sole distributor and
retailer of recreational cannabis in Quebec. Quebec has announced
that there will be fifteen (15) retails locations operating by July
2018, with one hundred and fifty (150) retail outlets planned for
2020. Recreational cannabis ordered online will be delivered by the
Canada Post.

Supply Contracts:
Quebec recently announced that it has signed tentative agreements
with the following six (6) cannabis producers for the supply of
recreational cannabis in the Province: Hydropothecary, Canopy
Growth Corp., Aurora Cannabis, MedReleaf, Tilray and Aphria.

Consumption
Restrictions: Recreational cannabis will be subject to the
same laws and regulations in place that govern the use of tobacco.
Consumption of cannabis will be prohibited on the property of
health care and educational institutions, as well as outdoor areas
frequented by minors.

Minimum Age:
Eighteen (18) years old.

Personal
Cultivation: Prohibited

Saskatchewan

Distribution &
Retail: Saskatchewan has proposed a model whereby the
Saskatchewan Liquor and Gaming Authority ("SLGA") will be
responsible for regulating the wholesaling and retailing of
recreational cannabis while the private sector will be the sole
retailers of recreational cannabis. The SLGA intends on issuing
approximately sixty (60) retail permits to private retailers in
around forty (40) municipalities and First Nation communities with
populations of at least 2,500 residents. Regions with larger
populations will be allocated additional permits. Retail cannabis
locations will be stand-alone stores selling only cannabis and
cannabis related accessories. Private retailers will also have the
option to offer online sales.

Consumption
Restrictions: TBD

Minimum Age:
TBD

Personal
Cultivation: TBD

Yukon

Distribution &
Retail: The Yukon Liquor Corporation will be solely
responsible for importing, storing, transporting and distributing
(to retail locations) recreational cannabis. Initially, only
government-run retail and e-commerce sales will be available. The
Territory intends on establishing a licencing regime for private
retail sales, although such regulations are still being
developed.

Consumption
Restrictions: Initially, consumption of recreational
cannabis will only be permitted in private residences and on
adjoining properties. The Territory is considering the possibility
of future cannabis consumption in public spaces. Cannabis in motor
vehicles will also be prohibited unless it is in a closed container
and inaccessible by those in the vehicle.

Minimum Age:
Nineteen (19) years old.

Personal
Cultivation: Four (4) plants per private residence.

Conclusion

Several provincial and territorial governments are still in the
process of finalizing the details of their respective regulatory
approaches to recreational cannabis.

Although the Liberal Government targeted a legalization date in
July 2018, the Senate's vote on the Act schedule on or before
June 7, 2018 will likely result in Canadians not being able to
purchase recreational cannabis until at least August, and
potentially as late as September 2018. The Federal Government has
announced that following Royal Asset, which would immediately
follow the vote in the Senate, the provinces and territories will
need at least eight (8) to twelve (12) weeks to prepare retail
operations.

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